Corporation tax will stay at 12.5pc, Lenihan insists
Published 10/09/2010 | 05:00
The Government yesterday insisted it would block any effort by the EU to bring Ireland's corporation tax rate in line with other member states.
A fresh threat to Ireland's crucial 12.5pc corporation tax rate has emerged in new proposals from the European Commission.
But Finance Minister Brian Lenihan said the proposals did not threaten the rate, which is vital to attracting foreign firms.
"It doesn't as such, but it's something we will be keeping a wary eye on as a government," he said.
The Department of Finance said it had always been aware of the Commission's intention to bring forward a proposal.
But it said the Government's position on our corporate tax regime was unambiguous and the rate would remain at 12.5pc.
"That commitment is protected, in an EU context, by the principle of unanimity in taxation matters. That was further enhanced by the insertion of a legal guarantee in the Lisbon Treaty," the department said.
The Government's scepticism about the Common Consolidated Corporate Tax Base is well known and officials say "this scepticism is shared by many member states".
Enterprise Minister Batt O'Keeffe said the Government had inserted a legal guarantee in the Lisbon Treaty to ensure the tax rate could not be touched.
"Ireland's corporation tax rate is not going to be changed. It is extremely important in terms of foreign direct investment," he said.
Tanaiste Mary Coughlan insisted the maintenance of a 12.5pc corporation tax would continue to be Irish policy. Ireland had a veto if the issue of corporation tax was to progress to tax harmonisation, Ms Coughlan said.
But she said she believed that the EU proposal was looking at a system of taxation as opposed to a determination of the level of corporation tax within each member state.
"I believe the MEPs from Ireland, the Fianna Fail MEPs, expressed their view on behalf of the party that we do not want any interference on the issue of corporation tax and many other member states have equally expressed concerns."